China Puts its Own Spin on Agreement to Reduce Trade Deficit

China’s state media are playing up what it says is a trade war truce and de-escalation in tensions after negotiators from Washington and Beijing agreed to hold off on tariffs and “substantially reduce” the U.S. trade deficit. However, economists and business leaders argue that there is more to managing the relationship than balancing imports and exports.

State media in China are focusing heavily on the argument that Beijing did not give any ground and adopting their own take on the deficit question — focusing instead the country’s pledge to boost imports from the United States.

An editorial in the China Daily entitled “Sino-US agreement benefits both countries and the world” said that: “For China, ‘significantly increasing’ imports of U.S. goods and services, such as agricultural and energy products, will help meet its development needs and the desires of Chinese consumers.”

The editorial added that, “despite all the pressure, China didn’t “fold” as U.S. President Donald Trump observed. Instead, it stood firm and expressed its willingness to talk.”

An editorial in the party-backed Global Times said that while many may have noted what the joint statement said about reducing the U.S. deficit, that does not mean that the U.S. has won the trade talks. Instead, the piece said it was more a matter of learning to right an imbalance in the two countries’ trade systems.

The editorial called the now averted trade war a “historic period of difficult adjustment,” adding that “as one of the largest trade surplus countries in the world, China has learned from this dispute with the US.”

On news commentary boards, online response to agreement was mixed. Some argued the agreement was a sign that China had won. One commentator said: “America is just a paper tiger, there’s no need to be afraid.” Another: “Washington is weak in the knees.”

Many were pleased to see the two countries cooperating, agreeing that the decision was a “win-win.”

Others were not as certain. “Be careful, Trump will go back on his word,” wrote one person.

Despite state media’s rosy outlook about the agreement and confidence China had won online, huge differences between the two economies remain.

Lu Suiqi, an associate professor in economics at Peking University noted the agreement is just an incremental one and follow through will be key.

He said the focus on talks instead of brinkmanship was a positive development but not a guarantee of smooth sailing ahead.

“If any party fails to make good on its implementation, there may be renewed differences. And if these differences are hard to resolve, there’s still the possibility of putting the trade war back on,” Liu said.

Explainer: What is a Trade War?

Philip Levy, senior fellow on the global economy at the Chicago Council on Global Affairs told VOA the deal is not the worst outcome we could have had, it’s sort of the mediocre outcome many feared.

“This looks like they’re opting for some sort of managed trade solution that I don’t thing is good for either country, but it is better than a tariff war,” Levy said.

Much of what the statement said about longstanding trade differences was vague at best, some analysts note.

The joint statement said both sides agreed to encourage two-way investment and committed to creating a business environment for fair competition.

Since China joined the World Trade Organization in 2001, it has been promising and pledging to open up and many are growing tired of the talk. Over the past few years, a shift backwards toward a more central state-led economy has become more prominent.

And even as Chinese President Xi Jinping pledges to open up China’s economy further, he is asserting the party and state’s control and dominance over everything — including business.

Foreign companies’ frustration with rules in China that force the handover of sensitive technology and concerns about intellectual property persist. There is also concern about government subsidies in cutting edge industries and support for state-owned enterprises.

“There are fundamental questions about how a state dominated economy of that size fits into the global trading system. And I don’t think we’ve answered those questions,” said Levy.

Speaking at a gathering of former officials and business leaders in Beijing last week, Jeremie Waterman, the president of the China Center at the U.S. Chamber of Commerce, said that for businesses, market access is a bigger concern than trade imbalances.

“The focus of U.S Chamber of Commerce and our members really is on resolving the systemic issues, not on near term efforts to address the trade deficit,” Waterman said.

He added that focusing on opening markets and not closing them is best because it would address longstanding concerns about access in China. It could also help with the deficit.